Answer the following questions true (T) or false (F)
1. A network externality refers to a situation in which the usefulness of a product decreases with the number of consumers who use it.
2. Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.
3. The iPod is a product without any significant network externalities.
1. FALSE
2. TRUE
3. FALSE
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If all firms in the industry have similar demand, marginal revenue, and cost curves as the firm in the figure above, in the long run
A) nothing changes. B) some firms exit the industry and the economic losses of the remaining firms decrease. C) some firms exit the industry and the economic profits of the remaining firms increase. D) new firms enter the industry and the economic losses of the original firms decrease. E) new firms enter the industry and the economic profits of the original firms increase.
Because handling charges are relatively fixed, the interest rate on a loan generally
A) increases with the size of the loan. B) decreases with the size of the loan. C) is constant regardless of the size of the loan. D) is unrelated to the size of the loan.
The process of research and development
a. always leads to useful products. b. almost never leads to useful products. c. often involves a waste of resources. d. is usually conducted in governmental laboratories.
Permanent declines in inflation such as those seen in Chile and Sweden must have been a result of:
A. less independence for their central banks. B. a change to targeting interest rates instead of inflation rates. C. a decrease in the central bank's inflation target. D. an increase in the central bank's inflation target.